What Are Forex Majors And Minors?

Last Updated on December 17, 2021 by Alphaex Capital
what are forex majors and minors in forex trading

What are forex majors and minors?

Strange terminology indeed!

When you think about it there are over 180 currencies to exchange too.

Every country requires exchanging currencies from one to another.

However, lucky for you that the market’s don’t speculate on all 180 currencies…

Instead, they are narrowed down to a basket between 40-70 forex pairs offered by the broker.

Ok, so why are they called majors in forex trading?

Not all of the forex pairs are in the major’s bracket.

The majors and minors (plus exotic forex pairs) are categorised by popularity and liquidity.

The majors are the most commonly traded currency pairs globally.

These are the cheapest and have the fastest execution to market plus pricing tends to be less volatile.

There are 7 majors, which are:

The global economy is dependent on the highs and lows of different country-specific currencies and their importance.

  1. The Euro/Dollar (EUR/USD)

The EURUSD is the most traded currency pair due to its widened appeal with the EUR and USD. Major announcements from the European Central Bank and the US Federal Reserve will impact the currency pair.

  1. The Dollar/Japanese Yen (USD/JPY)

What makes the USD/JPY a major is because Japan is one of the largest net exporters in the world, which means huge volumes of businesses would exchange into and from the Japanese Yen.

  1. The British Pound Sterling/US Dollar (GBP/USD)

The GBP/USD is one of the most traded pairs thanks to the volume of business between the United States and the United Kingdom.

You may see this pair referred to as Cable. This was because the there was a large cable that ran across the floor of the Atlantic Ocean that connected the UK and the US.

  1. The US Dollar/Swiss Franc (USD/CHF)

The USD/CHF is referred to as the Swissie most commonly. The USD/CHF is a safe haven currency which is where investors will put their money when the markets are extremely volatile and uncertain.

  1. The Australian Dollar/US Dollar (AUD/USD)

One of a few commodity currecy pairs. Also known as the Aussie, Australia is a huge exporter of coal and iron-ore. This means that the price is dependent on coal and iron-ore prices

  1. The US Dollar/Canadian Dollar (USD/CAD)

Another popular commodity pair is the “Loonie.” Canada is also an economy dependent on commodity prices. It has huge reserves of timber, natural gas, and oil. The Canadian Dollar is another commodity pair and is nicknamed the Loonie. The commodities it exports are oil, natural gas and timber.

  1. The New Zealand Dollar/US Dollar (NZD/USD)

Also known as the Kiwi, New Zealand is the largest exporter of dairy based products, which means that if milk prices rise, the NZDUSD tends to follow.

Next up is the minors, which are different crosses of currency pairs which are less popular but are still liquid and tradeable. However, the minors tend to be slightly more expensive to trade and can tend to be more volatile.

To some, more experienced traders, they would see minors as a better option as they tend to react to technical analysis slightly better.

So he minors are basically currency’s paired with non-USD.

There are minors, which are:

Euro Crosses

EUR/CHF         Euro-Zone / Switzerland

EUR/GBP         Euro-Zone / United Kingdom

EUR/CAD         Euro-Zone / Canada

EUR/AUD        Euro-Zone / Australia

EUR/NZD         Euro-Zone / New Zealand

EUR/JPY          Euro-Zone / Japan

Great British Pound Crosses

EUR/GBP         Euro-Zone / United Kingdom

GBP/JPY          United Kingdom / Japan

GBP/CHF         United Kingdom / Switzerland

GBP/AUD        United Kingdom / Australia

GBP/CAD        United Kingdom / Canada

GBP/NZD         United Kingdom / New Zealand

Japanese Yen Crosses

EUR/JPY          Euro-Zone / Japan

GBP/JPY          United Kingdom / Japan

CHF/JPY          Switzerland / Japan

CAD/JPY         Canada / Japan

AUD/JPY         Australia / Japan

NZD/JPY         New Zealand / Japan

Different Crosses

AUD/CHF        Australia / Switzerland

AUD/CAD        Australia / Canada

AUD/NZD        Australia / New Zealand

CAD/CHF        Canada / Switzerland

NZD/CHF        New Zealand / Switzerland

NZD/CAD        New Zealand / Canada

Lastly, the exotic pairs.

These are a basket of currency pairs from emerging markets.

The exotic pairs tend to have the widest spreads, thinnest liquidities but can be the least volatile compared to the others.

There are exotic pairs, which are:

USD/HKD        United States / Hong Kong

USD/SGD        United States / Singapore

USD/ZAR         United States / South Africa

USD/THB         United States / Thailand

USD/MXN        United States / Mexico

USD/DKK         United States / Denmark

USD/SEK         United States / Sweden

USD/NOK        United States / Norway

USD/INR          United States / India

GBP/INR          United Kingdom / India

Which should I Trade?

This is a difficult question, it’s kind of like which car should you drive – everyone has their preferences.

The majors are the cheapest to trade due to the sheer volume traded each day. To find out what you should trade is by simply loading up a platform and go through each currency pair and figure out whether or not it fits your trading style.

Even though it is a 24-hour market, 5 days a week, it is usually better to trade currency pairs in your time zone – this is due to liquidity and cheaper pricing again.

You may even want to take note of forex pairs that correlate as this could also give you an added benefit.

All of this is a preference to you.

There is no right or wrong way of investing YOUR money in forex trading for beginners.

Over time, you will learn everything about the currency pair, how it reacts to news, price action etc. – so everything is learnable.

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